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Ontario Property Tax Assessment Changes

What is the Ontario Fair Assessment System?
The Ontario Fair Assessment System is a fair, consistent and understandable system of property assessment and taxation in Ontario. Under the new system, all properties are assessed at their current value. Current value is defined as the amount of money a property would realize if sold at arm's length by a willing seller to a willing buyer. Municipalities can set different tax rates for each of the seven new property classes. By varying the tax rates consistent with ranges of fairness set by the province, municipalities can adjust the amount of tax paid by each property class to promote fairness and respond to local concerns.

The Ontario Fair Assessment system will:

* Reassess all properties in Ontario based on current value
* Ensure property values remain current, with regular updates
* Guarantee tax relief for low-income seniors and disabled homeowners - Simplify the assessment appeals process - Give municipalities important new powers to address their revenue needs in ways that best fit local priorities

Why is property assessed?
Property has always been assessed to provide a base for education and municipal taxes, which help pay for local services such as police and fire protection, garbage and snow removal, road maintenance, public health and welfare. In Ontario assessed value is determined by property assessors who work for the Property Assessment Division of the Ministry of Finance. The assessed values of all properties in a municipality are listed on an assessment roll which is delivered to municipalities. These values are multiplied by the municipal and education tax rates to determine the total property tax.

Why is the government reassessing my property?
The government initiated a province-wide reassessment in 1996 to make property assessment fair and consistent within municipalities and across the province. Every property in Ontario was assessed for the 1998 taxation year based on its current value as of June 30, 1996.

Reassessment was necessary because the former system had become out-of-date, inconsistent and unfair. Although most municipalities had assessments that were relatively up-to-date, assessments in some communities were as much as 50 years out-of-date. Out-of-date assessments create unfairness because owners of similar properties were paying different amounts of property tax.

This means that some property owners were paying too much while others have not been paying their fair share.

How will the Ontario Fair Assessment System fix these problems?
By reassessing every property to reflect its current value as of June 30, 1996, the Ontario Fair Assessment System will ensure that similar properties with a similar value in a municipality will pay similar taxes. Property taxes will be based on up-to-date, accurate and understandable property assessments.

Current Value Assessment

How is property assessed?
Assessors have three main ways of determining the assessed value of a property. They can look at sales of similar properties, calculate how much it would cost to replace the property or use the income a property could generate to determine its value. The method or methods used depend on the type of property. Assessors also inspect and measure buildings; monitor building permits, which indicate where renovations or new construction is taking place; and use computer programs to help them calculate the assessed values.

What would cause my assessment to change?
If you have made changes to your property, such as building an addition, the current value of your property would increase, so your assessment would also increase. Demolishing a garage, on the other hand, could decrease the assessed value of your property. Regular maintenance, such as roof repairs or window replacements will not increase the assessed value of your property.

What is current value assessment? Why is it any different from market value?
Almost every assessment system in the world is based on value in one way or another. Property assessments across the province have been updated to current value in order to have a fair and consistent province-wide standard. Under the Ontario Fair Assessment System, your current value assessment is a reasonable estimate of what your property would have sold for on June 30, 1996. There are differences between the old and new property tax systems. For example:

* Farmland assessments are based on continuing farm use, not on sales for development or any other potential use;
* Tax relief for low-income seniors and low income persons with disabilities is guaranteed;
* Protection for lower-valued commercial property such as small main street businesses is a municipal option; and the appeals process is simplified and more accessible.

What are some of the things that would affect the value of my property?
There are many factors affecting the value of your property. Some of these factors include the location and size of the lot, the age and general condition of the building(s), the type of construction and construction materials used, the number and size of the rooms, and the income generated by the property (if applicable).

Is waterfront property, such as summer cottage, assessed differently?
To determine the current value of your waterfront property, assessors will take a number of attributes into account. Those most frequently used would include the selling price of other similar properties, location, access (water, road, year-round), amount of shoreline, type of shoreline, exposure, facilities and size of building. Generally speaking, in the case of waterfront property, more attributes are collected and analyzed for the land than for the buildings, which may contribute less to the overall value of the property.

What happens when the reassessment is completed?
When the reassessment is completed, a Notice of Property Assessment will be mailed to every property owner. The notice will indicate the assessed value of your property and who to contact for clarification or more information. The assessment will reflect the current value of your property as of the the date noted in the chart above. In addition, each municipality will receive an assessment roll , which lists the assessment for all properties in the municipality. The municipality will then have to make decisions about how to distribute the tax burden among the different property classes. Assessments, together with the municipal and education tax rates, will determine the amount of property taxes.

What are the different property classes?
The Ontario Fair Assessment system establishes seven standard property classes for assessment and taxation purposes:

* Residential/farm
* Multi-residential
* Commercial
* Industrial
* Pipeline
* Farmlands
* Managed Forests.

The new system also allows the provincial government to identify additional property classes.

For example, municipalities will be able to pass a by-law creating a special class for new multi-residential properties. This will allow municipalities to encourage construction of new apartment buildings by taxing them at a lower rate.

How can I tell if my assessment is accurate?
Ask yourself whether your current value assessment is a reasonable estimate of what your property would have sold for on the specific date of the assessment. If you think it is, you have an accurate assessment and there is no need for you to do anything further, except to retain your Notice of Property Assessment for your records.

Will my property be reassessed on a regular basis?
Yes, make reference to the chart above for valuation dates. Updating assessments will keep the system fair and equitable because properties will be assessed at their current value, based on the same date, in all parts of the province. For taxation years after 2005, a three-year rolling average will be used. That means the assessed value will be the average of the property's value for the current taxation year and the previous two taxation years. Three-year rolling averages are intended to moderate any fluctuations in property values which may occur in any single year.

Who is responsible for conducting assessments?
The Property Assessment Division of the Ministry of Finance is responsible for the reassessment tax year. Ontario is divided into 31 assessment regions. Each region has an Assessment Commissioner, who is responsible for the assessment activity within a region. The Commissioners and their assessors deal directly with taxpayers, municipalities and school boards.

Responsibilities include:

* Determining the assessed value of every Ontario property;
* Sending out Notices of Property Assessment;
* Answering inquiries from the public about property assessment;
* Defending assessments before tribunals and courts;
* Conducting an enumeration every three years to support municipal and school board elections.

Recent legislation creating the Ontario Property Assessment Corporation responds to municipal government requests for greater control over the management of the assessment process, which is a key element of their local property tax system. All Ontario municipalities will be members of the new not-for-profit corporation, which will assume responsibility for the assessment function in any tax year. Assessment services will be provided by the Ontario Property Assessment Corporation to standards established by the Minister of Finance.

 Municipal Taxation

Does reassessment mean I'll pay more taxes?
An increase in your current value assessment does not necessarily mean you will experience a tax increase, in fact, your taxes may decrease. If a municipality's total tax base expands as a result of, for example, a new industrial sector that has been developed, new office buildings, new residential developments or condominiums, your local government can generate the same municipal tax revenue it has in the past by applying a lower tax rate. It is quite possible that the assessment of a property could rise but the actual property taxes could fall as a result of the reassessment. As always, your municipality will set the municipal tax rate. The provincial government will set education tax rates. However, under the new Ontario Fair Assessment System, municipalities will have the option of phasing in any tax changes (municipal and education) over a period of up to eight years.

How are my property taxes calculated?
Your current value assessment is just one part of the calculation. The other parts are the municipal tax rate, set by your municipality, and the education tax rate, set by the province. This is the formula for calculating property tax:

Current Value Assessment x Municipal Tax Rate = Municipal Property Taxes
Current Value Assessment x Education Tax Rate = Education Property Taxes
Education Property Tax + Municipal Property Tax = Your Property Tax

Will there be any protection for seniors and others on fixed incomes?
The government recognizes that low-income homeowners who are seniors or disabled need to be protected from large tax changes due to reassessment. The Ontario Fair Assessment System requires municipalities to offer a program to cancel or defer tax increases resulting from reassessment or provide other tax relief. Municipalities will also be able to phase in change gradually over a period of up to eight years.

The term "mill rate" will be replaced with "tax rate". What is the difference?
A mill rate referred to the amount of tax dollars a municipality would collect for every $1,000 of assessment. The tax rate will be a percentage of the assessed value of a property, and will be used to calculate property taxes. The switch from a mill rate to a tax rate makes it easier for property owners to understand how their property taxes are calculated. Under the new system, there will be a tax rate for each of the seven standard property classes. Municipalities will set the tax rate for each property class based on the revenue they will need to supply local services, such as fire fighting, garbage collection and snow removal. Municipalities will also include the education tax rate in the total tax rate.

Municipal Flexibility

Will municipalities have more flexibility when setting tax rates?
Under the Ontario Fair Assessment System municipalities will have the power to vary the municipal tax rates for each of the seven new property classes to respond to local concerns and to achieve greater equity between property classes. Ranges of fairness established by the province will ensure that any disparity in municipal tax burdens that currently exists cannot be increased.

 Assessment Appeals

Resolving Assessment Concerns

If you don’t agree with your Assessed Value

Accurate assessed values are the cornerstone of the property tax system.

The Municipal Property Assessment Corporation assesses over 4.4 million properties in Ontario. We strive for accuracy and are committed to ensuring that 2005 assessed values are accurate.

To test your assessed value, ask yourself if you could have sold your property on January 1, 2005 for its assessed value.

If your answer is “yes” your assessed value is accurate.

If your answer is “no” you can:

1. Ask MPAC to review your property’s assessed value
2. File a Notice of Complaint with the Assessment Review Board

The information below will help guide you through the process.

We are here to answer your questions. If you need information or help, please call us at 1 866 296 MPAC (6722) .

How to ask MPAC to review your property’s assessed value

If you believe that your assessed value is inaccurate, they will review it. There is no fee for this review. You can request a review any time before December 31, 2007.

There are three ways to request a review:

* Complete a Request for Reconsideration form; or
* Call toll free at 1 866 296-MPAC (6722) to request a form by mail; or
* Write a letter requesting a review of your assessed value to:

The Municipal Property Assessment Corporation
P.O. Box 9808
Toronto Ontario M1S 5T9
Fax: 1 866 297-6703
* In your letter, please include:

- your 19-digit roll number on your assessment notice;
- your full name, address and phone number; and
- the reasons why you believe your assessed value is incorrect.

If you have information such as sales of similar properties in your area, rental information, farm leases or any other material that can help us, please include it. We may also call you to ask for more information.

Trademarks owned or controlled by the Canadian Real Estate Association used under license.